RPP chief warns rates may rise

   Interest rates will have to rise even further if the government does not implement a tight fiscal policy next year, National Bank of Poland President Hanna Gronkiewicz-Waltz was quoted as warning Friday.

   "If the government does not implement tight budgetary policy and restrictive spending, the (Monetary Policy) Council (RPP) will be forced to increase interest rates," business daily Parkiet quoted her as saying.

   Gronkiewicz-Waltz has so far welcomed government plans to trim the budget deficit to 1.6% of gross domestic product (GDP) in 2001 from some 2% expected this year.

   But analysts said the planned deficit level could be raised after the Cabinet announced it would delay its final budget draft by six weeks until Nov. 15 because it had to revise the state's income and spending levels.

   Finance Minister Jaroslaw Bauc last Wednesday reiterated his commitment to stick to the planned 2001 fiscal tightening during budget revisions and praised the effects of past belt-tightening policies.

   The RPP has raised the cost of borrowing by a total of 600 basis points to 19-23% over the last year to combat stubborn inflation. The latest 150-basis point increase, in late August, was triggered by resurgent inflation, which jumped to its two-year high of 11.6% year-on-year in July. Gronkiewicz-Waltz also called for the government to counter foreign macroeconomic analyses suggesting it would increase budget spending in the run-up to next year's parliamentary polls.

   – Reuters